‘NIRP is Killing Us,’ Wheezes Spain’s Second Biggest Bank

In Europe, banks are beginning to feel the side effects from the ECB’s negative interest rate policy (NIRP), which (among other things) is meant to weaken the euro, fuel inflation, force banks in riskier lending, and prevent Eurozone economies from buckling under the sheer weight of their sovereign debt.
But it doesn’t work. Inflation remains much lower than the ECB’s target headline rate of 2%, European sovereign debt continues to grow at an alarming rate, and bank lending remains anemic in most countries. And it could actually end up killing the patient, Europe’s biggest banks.
That’s what Francisco Gonzlez, Executive Chairman of Spain’s number-two financial institution, BBVA, just warned in a speech at the Spring Membership Meeting of the world’s most powerful financial lobby organization, the Institute of International Finance (IIF).
‘Europe is caught in a trap,’ he said. ‘It has to do something to boost its growth potential. But expansive monetary policy has led to negative interest rates, which are killing us.’

This post was published at Wolf Street by Don Quijones ‘ May 24, 2016.

UPDATE: Q1 2016 Canadian Silver Maple Sales Surge To Highest Record Ever

The Royal Canadian Mint just published its Q1 2016 Report, and the silver bullion coin sales figures were stunning to say the least. Not only did sales of Canadian Silver Maple Leafs surpass its previous record during the third quarter last year, it did so by a wide margin.
Why is this such a big deal? Because Q1 2016 sales of Silver Maples topped the Q3 2015 record, without surging demand and product shortages. Last year, there was a huge spike in silver retail investment demand due to the supposed ‘Shemitah’ or the collapse of the broader stock markets. Investors piled into silver in a big way as they perceived a year-end market crash was inevitable.
During last August and September, some websites stated 2 month delivery wait times for certain products such as Silver Eagles and Silver Maples. With the huge spike in demand, sales of Canadian Silver Maples reached 9.5 million oz (Moz) in Q3 2015. Although, once investors became more relaxed as the broader markets turned around, demand for physical silver investment cooled down. Thus, Silver Maple sales declined to 9.1 Moz in the last quarter of 2015.
However, something very interesting took place during the first quarter this year. Sales of Silver Maples jumped to an all-time record high of 10.6 Moz:

This post was published at SRSrocco Report on May 24, 2016.

Why China Is Being Flooded With Oil: Billions In Underwater OPEC Loans Repayable In Crude

When the price of oil was above $100, many of the less developed oil exporting OPEC members decided to capitalize on the high price and cash out by taking loans using the precious liquid as collateral very much the same way corporate CEOs use their inflated stock (thanks to buybacks they authorize) to issue loans against said stock. And why not: even if the price of oil were to drop, they could just pump more until the principal is repaid. However, few oil exporters anticipated such an acute oil plunge in such as short time span, which resulted in the value of the collateral tumbling by 70%, and now find themselves have to repay the original loan by remitting as much as three times more oil!
According to Reuters, this is precisely what happened in the years preceding the great 2014-2015 oil bust: “poorer oil-producing countries which took out loans to be repaid in oil when the price was higher are having to send three times as much to respect repayment schedules now prices have fallen.”
As a result, the finances of countries such as Angola, Venezuela, Nigeria and Iraq have been crippled, in the process creating further division within the Organization of the Petroleum Exporting Countries.
But while these already poor and corrupt OPEC nations were the biggest losers, one country was a huge winner, the country that provided the billions in virtually risk-free, oil-collateralized loans to any country that requested them. China. The same China which has once again proven smart enough to not demand repayment in fiat but in physical commodities, be they oil, copper or gold.

This post was published at Zero Hedge on 05/24/2016.

What Will Sink the US Auto Boom?

It’s already in the works and goes far beyond subprime.
The auto industry is crucial to the US economy and jobs. Auto sales account for 21% of total retail sales so far this year. They’re up 4.5% year-over-year. New Vehicle sales in 2015 hit an all-time record, even as the rest of brick-and-mortar retail was weak.
The industry – including component makers and other suppliers – account for a good part of US manufacturing. Transporting over 17 million new vehicles a year from assembly plants or ports of entry to cities around the country is big business for struggling railroads. Transporting them from rail yards to dealer lots is big business for specialized trucking companies. They also haul millions of used vehicles every year to and from auctions where rental-car and leasing companies dispose of their vehicles. Many of the jobs across the industry pay well.
Auto sales involve services, such as finance and insurance. They’re a significant source of revenues for local and state governments. Wall Street salivates because it gets to extract fees during many stages of the process – particularly in financing these sales and then securitizing the loans.
And all of it has been booming for years!

This post was published at Wolf Street by Wolf Richter ‘ May 24, 2016.

Northwest Territorial Mint Scandal: Investors Had Fair Warning On This Blowup As Well

Northwest Territorial Mint Scandal: Investors Had Fair Warning On This Blowup As Well
The news unfortunately just keeps getting worse for customers and creditors of Northwest Territorial Mint. The prominent bullion dealer located near Seattle, Washington filed for bankruptcy court protection at the end of March. The losses of customers who never received delivery of orders plus the losses of other creditors could be as high as $50 million, according to news reports.
The U. S. Trustee in charge, Mark Calvert, recently estimated the firm has $56 million in liabilities and only $6.4 million in assets. He figures the recovery for unsecured creditors will be less than 10%.
Northwest Territorial’s former owner, Ross Hansen, seems to be blaming the bankruptcy on a defamation lawsuit that he and his firm recently lost.
The judgment was $38.3 million in total and the court ordered Hansen to pay $12.5 million promptly. He filed for bankruptcy protection instead.

This post was published at Zero Hedge on 05/24/2016.

Switzerland About to Vote on ‘Free Lunch’ for Everyone

Will the Swiss Guarantee CHF 75,000 for Every Family?
In early June the Swiss will be called upon to make a historic decision. Switzerland is the first country worldwide to put the idea of an Unconditional Basic Income to a vote and the outcome of this referendum will set a strong precedent and establish a landmark in the evolution of this debate.
The Swiss public will have to approve or reject a change in the constitution that would allow for the introduction of an Unconditional Basic Income (UBI), or a preset, monthly minimum income to be paid out by the government to every adult and child in the country if their income falls below a specific threshold. Even though details of this proposal have been few and far between, the most commonly cited amount of this guaranteed income would be 2,500 Swiss Francs for adults and 625 francs for children. The architects of the proposal stress that this government-guaranteed payment, unlike the current benefit programs, will be entirely ‘no questions asked’, i.e., it will not be means-tested and will apply to every person legally living in Switzerland.
Currently, these are all the details that the Swiss have at their disposal to make their decision. No plan has so far been put forward to specify how such a proposal would be financed, whether an increase in income tax or VAT will have to be enforced, which specific existing welfare programs it would replace or how the glaringly obvious exploitation possibilities of such a plan would be avoided, without any kind of means test – or without ‘asking any questions’, according to one of the campaign’s catchphrases.
The main argument of the supporters of this initiative is that it would support the people that will, or already do, lose their jobs to automation and technological progress; a defensive move against ‘the rise of the robots’ as they put it. They also claim that such a measure will give people the opportunity to grow, to learn and to pursue skills or professional goals that are now rendered prohibitive by their current meaningless and mundane jobs, that they are forced into in order to simply pay their bills. ‘What would you do if your income were taken care of?’ asked the pro-UBI campaign in Geneva, with a poster that officially made it into the Guinness Book of Records as the world’s largest.

This post was published at Acting-Man on May 24, 2016.

Clinton Adviser, Nobel Prize Winning Economist Endorsed Venezuelan Socialism

Venezuela is in a state of complete crisis. The country has been forced to face the horrors of hyperinflation, food shortages, and devastating depression. In spite of having the world’s largest oil reserves, the country has had to resort to rationing electricity. A horrifying article by the New York Times depicts the state of Venezuelan hospitals, with children dying by the day due to a lack of medicine and basic supplies.
This is the terrifying reality of socialism, the inevitable consequence of the economic policies of the late Hugo Chavez and his successor, Nicols Maduro. Since 1999, the two socialist administrations championed price controls, nationalization of industries, and wealth redistribution.
While it is not surprising to see these policies supported by Marxist politicians, what is deeply troubling is the amount of support the Venezuelan model has received from prominent economists over the years. During a visit in 2007, Joseph Stiglitz, who received the 2001 Nobel Prize in economics, praised what he called ‘positive policies’ of the Chavez administration:

This post was published at Ludwig von Mises Institute on May 24, 2016.

MAY 24/GLD LOSES 3.86 TONNES OF GOLD FROM ITS INVENTORY/AT THE COMEX, THE FRONT MAY DELIVERY MONTH ONCE AGAIN INCREASES THE AMOUNT OF GOLD STANDING TO 6.8874 TONNES/LAST NIGHT MOODY’S DOWNGRADES …

Good evening Ladies and Gentlemen:
Gold: $1,228.10 DOWN $22.90 (comex closing time)
Silver 16.24 DOWN 17 cents
In the access market 5:15 pm
Gold $1227.20
silver: 16.22
i) the May gold contract is a non active contract. Yet we started the month with 5.67 tonnes of gold standing and it has increased every single day and today sits at 6.68 tonnes of gold standing:
The amount standing for gold at the comex in May is simply outstanding at 6.8740 tonnes. The previous May 2015, we had only .08 tonnes standing so you can certainly witness the difference as the demand for gold by investors/sovereigns is on a torrid pace. This makes the excitement for June gold that much more intense as more players are refusing fiat and demanding only physical metal. I will be reporting daily as to how which is standing for delivery through the active month of June. June is the second largest delivery month after December.
Let us have a look at the data for today.
At the gold comex today we had a GOOD delivery day, registering 44 notices for 4400 ounces for gold, and for silver we had 0 notices for nil oz for the non active May delivery month.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 240.41 tonnes for a loss of 63 tonnes over that period.
In silver, the open interest ROSE by 1,339 contracts UP to 203,581 as the price was silver was DOWN by 7 cents with respect to YESTERDAY’S trading.. In ounces, the OI is still represented by just over 1 BILLION oz i.e. .1.018 BILLION TO BE EXACT or 145% of annual global silver production (ex Russia &ex China)
In silver we had 12 notices served upon for 60,000 oz.
In gold, the total comex gold OI fell by a CONSIDERABLE 5,076 contracts down to 551,561 as the price of gold was DOWN $1.30 with yesterday’s trading(at comex closing). They certainly got the liquidation in gold but not silver.
We had a huge withdrawal (and no doubt this is paper gold) in gold inventory at the GLD to the tune of 3.86 tonnes. The inventory rests at 868.66 tonnes. . We had a good sized deposit in silver inventory at the SLV to the tune of 951,000 oz . Inventory rests at 336.024 million oz..
First, here is an outline of what will be discussed tonight:

This post was published at Harvey Organ Blog on May 24, 2016.

US Corporate Bond Market Fuse Has Been Lit Which Will Push The Economy Over The Edge – Episode 979a

The following video was published by X22Report on May 24, 2016
Nokia might layoff 10,000-15,000 employees. We had a surge in new home sales at the same time they are telling us the American people do not want to spend. Manufacturing goes global, its declining around the world.17th week in a row the smart money is getting out of stocks. Obamacare doesn’t work, its a drain on the people.

Crude Spikes Above $49 After Biggest Inventory Draw Since 2015

Following last week’s surprise draw (from the DOE data), API reported a huge 5.14mm draw (against expectations of a 2mm barrel draw) – the biggest since Dec 2015. Bear in mind that last week API reported a large build only to se a major draw in DOE data so perhaps this is catch down from the Canada interruption. Cushing saw its first draw in 4 weeks but Gasoline inventories rose dramatically ( 3.06mm vs -1.5mm exp). Crude prices are exuberantly looking to run last week’s high stops on the news, breaking above $49 again.
API
Crude -5.137mm (-2mm exp) Cushing -189k (-400k exp) Gasoline 3.06mm (-1.5mm) Distillates -2.92mm (-750k exp) This is the biggest inventory draw since Dec 18th…

This post was published at Zero Hedge on 05/24/2016.

Gold Daily and Silver Weekly Charts – Pre-Options Expiration Posturing on the Comex

“Love does not make you weak, because it is the source of all strength, but it makes you see the nothingness of the illusory strength on which you depended before you knew it.”
Lon Bloy
Let’s see, oh yes, tomorrow is the option expiration for the active June gold contract on the Comex. And the last two days gold has been pounded lower in Comex trading. How unusual.
The pundits will point to the ‘stronger dollar’, and so I have included that chart here so one can see its very modest increase.
I could also look at the distribution of puts and calls for June, but why bother? And I have been very busy today, doing ordinary things of much more consequence.
Most of what is being done by the neo-con leadership of the US these days in their attempts to rule the world, both financially and militarily, is less than an illusion but only a little more than dust. In other words, a vanity.

This post was published at Jesses Crossroads Cafe on 24 MAY 2016.

What Rate Hike: Only 4 Regional Feds Support Discount Rate Increase Compared To 9 Back In November

Moments ago, the Fed’s discount rate minutes for the months of March/April suggested that a rate hike may be indeed closer than some expect, because after just two regional Feds – those of Richmond Fed and Kansas City – requested an increase in the rate charged on direct loans from the central bank to 1.25% from 1% in the Feb/March meeting, this number doubled to four, with the inclusion of the San Fran and Cleveland Feds joining the group of regional Feds pushing for a 25 bps rate hike to the discount rate.
The four regional Feds, however, were overriden by the balance of the 12 regional Feds, including the Boston, New York, Chicago, Minneapolis, Dallas, Philadelphia, Atlanta, St. Louis Feds, all of whom recommended keeping the discount rate unchanged.
From the minutes:

This post was published at Zero Hedge on 05/24/2016.

Three Weird Consequences of NIRP

Negative interest rates are all the rage at central banks, a symptom of the deflation that is slowing spreading worldwide. The Bank of Japan, European Central Bank, and Swiss National Bank already peg rates below zero. Even if the Federal Reserve doesn’t formally join them, US rates are solidly negative in real terms.
Explicit or not, negative rates have odd and counterintuitive consequences. Imagine the entire banking system trying to stand on its head, and that’s kind of how a deflationary, NIRP-driven world will look. Here are three early signs.
Everything’s Price Will Fall
Today almost everyone, even economists, is used to living in an inflationary world. We assume most goods and services will get gradually more expensive. We don’t even notice because it is so normal. We notice the exceptions, like technology and energy-but their falling prices are notable precisely because they’re so unusual.
A deflationary world won’t look like this. Prices will fall instead of rise. Since everything you own will be constantly losing value, you will want to own as little stuff as possible, for as briefly as possible. We see some of this already in the ‘sharing’ economy. Companies like Uber and AirBnB help car and home owners shed some of their excess ownership.
Rising prices will move from being normal to unusual. This is already happening in Japan. This month an ice cream company called Akagi Nyugyo had to raise its prices for the first time in 25 years. The company so feared losing customers that it aired a TV commercialwith executives bowing in contrition.

This post was published at Mauldin Economics on MAY 20, 2016.

Main Street Suffers As Wall Street Cheers Oil Rig Count Declines

With stocks soaring on the heels of oil’s miraculous resurrection, the new normal narrative appears to be that higher oil prices are now “unequivocally good.” However, one glance at the following two charts and it’s clear Main Street feels anything like ebulient about the state of the oil industry in America…
As oil rig counts have plunged and oil prices have risen, so gas prices at the pump for the average joe have soared over 30% – the biggest spike since 2009 – which appears to have stymied any remaining confidence among American consumers…

This post was published at Zero Hedge on 05/24/2016.

Is OPEC A U.S. National Security Threat?

Republican Kevin Cramer from North Dakota is cosponsoring a bipartisan bill that will set up a commission to probe whether OPEC has used unfair means to bolster its dominance over the market and propose possible remedies on the grounds that the matter is important from a national security standpoint, reports the Financial Times.
Though similar efforts in the past against OPEC have been ineffective, another cosponsor, Republican Trent Franks, is optimistic about the outcome this time around.
‘If our bill does nothing more than to raise this question on to the agendas of business leaders and policymakers’.’.’.’it will have achieved something,’ he said.
The move holds significance due to the forthcoming Presidential elections, a flurry of U. S. shale bankruptcies, the growing closeness between Russia and Saudi Arabia, and souring relations between the U. S. and Saudi Arabia.
Recently, Saudi Arabia threatened to dump $750 billion of U. S. treasury securities and other American assets if the U. S. passed a bill allowing the family members of those killed in the 9/11 terror attacks to sue Saudi Arabia in U. S. courts. Nonetheless, the threat was unfounded as Saudi Arabia only holds $116.8 billion, and the OPEC nations combined hold $281 billion in U. S. treasuries as of February 2016, reportsBloomberg.

This post was published at Zero Hedge on 05/24/2016.

The Greatest Myth | Jeff Deist

The following video was published by misesmedia on May 24, 2016
Includes an introduction by Noah Bonn. Recorded at “Contra Krugman: Demolishing the Economic Myths of the 2016 Election”: the Mises Circle at Seattle’s historic Town Hall, on 21 May 2016. Special thanks to the Harvey Allison family for making this event possible.
Presidential candidates promise everything from living wages to free health care and college. Proposals about how to run whole segments of the economy are made with a straight face. The most tired and hackneyed ideas about income equality, corporate greed, creating jobs, and paying one’s fair share of taxes are trotted out. And millions of voters apparently believe it all, falling for the same promises of free stuff and prosperity from Washington.